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Director Dennis Arroyo of the Philippine National Economic and Development Authority yesterday said government must use more effort to attract investors because the crisis will suppress foreign direct investments (FDIs) this year until the next. Arroyo, who is the director of NEDA’s National Policy and Planning Staff (NPPS) spoke during the press launch of the World Investment Report (WIR) 2009 of the United Nations Conference on Trade and Development (UNCTAD).

“We have to work double time in addressing the negatives, that is, why investors do not easily pick the Philippines,” the NEDA official said. “We have to deal with concerns such as simplicity of doing business, corruption and governance, high cost of utilities like power, infrastructure, peace and order, as well as ’shockwaves’ or shocking events or news. These factors turn off investors and dampen their interest so we must address all of them,” he explained.

Arroyo, who was also the presenter of the WIR, said that sectors driving growth in the next couple of years, which investors could also look into, are business process outsourcing (BPO), mining, tourism, and renewable energy.

“The BPO sector continues to grow and has been expansive. There is a high global demand in the mining sector as seen in the higher prices of metals around the world. In tourism, we have the natural attractions. Now, we are spending on infrastructure in the Central Philippines region. It is also good to invest in renewables because of the passage of the law on renewable energy. We see more investments coming in at least in biofuels. I want to see investments in ocean wave power. As an archipelago we have access to a long coast line, so we should be investing more in wave power,” Arroyo said.

Meanwhile, in the WIR that he presented, Arroyo reported that the current crisis prompted the global slowdown in FDIs.

“Global FDI flows have been severely affected worldwide by the economic and financial crisis. After falling 14 percent in 2008 to $1.7 trillion, they are expected to fall further to below $1.2 trillion in 2009, recover slowly in 2010 and gain momentum in 2011,” he said.

He also said that the value of cross-border Mergers and Acquisitions (M&As) declined by 35 percent in 2008 to $673 billion. Greenfield investments, he added, were strong in 2008 (reaching 15,551 deals), though their number fell sharply in early 2009.

Cross-border M&As are defined as the joining of two firms or the takeover of one firm by another when the parties involved are based in different national economies.

Moreover, Arroyo also reported that FDI can help fill the investment voids in agriculture in developing countries, as well as supply technology and other resources.

Contract farming, according to the 2009 WIR, is a significant component of transnational corporations’ (TNCs) participation in agricultural production that could benefit both the TNCs and small farmers. This kind of farming, the Report added, provides inputs and transfers skills to a large number of small farmers, eases financial and technological constraints facing the farmers, and attaches them to global markets.

This article is distributed by www.Cebu-Philippines.net. An up-to-date guide to Cebu City Philippines and the Philippines. Providing current and relevant information about Philippines economy, visa, airlines, hotels, resorts, scuba diving, travel, health and wellness.

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